203 Towards an understanding of systemic embeddedness.

In order to provide standards for boards to determine the right level of systemic risk appetite, I argue that the scientific approach of the ecosystem perspective needs to be integrated within the general legal duties imposed by the institutional perspective and liability law. In my view, the ecosystem perspective suggests that the board’s responsibility to monitor and manage systemic risks needs to be oriented towards increasing the resilience of both its enterprise and its larger environment in response to unpredictable systemic changes. By thus relying on resilience as the central standard for risk management, the management of systemic risks becomes a tool for integrating the needs of the social and ecological environment with the agency of individual corporations. Systemic risk management becomes part of a larger approach to include scientific methods in corporate governance. Other methods included in this scientific approach are supply chain due diligence and collaborative learning through polycentric governance as well as more specific tools such as agent-based modelling, scenario planning and ecosystem mapping.1

All these methods and tools share the aim of understanding the complex dynamic in which the corporate enterprise operates in relation to its environment. Through such a systemic understanding of their operating enterprise, boards are able to determine how their decisions impact the capacity of their environment to continue providing the ecosystem services on which their enterprise and others depend. As such, these scientific methods provided by the ecosystem perspective help boards to fulfil their general legal duty to establish proper systemic risk management systems and to prevent the disproportionate endangerment (gevaarzetting) of their environment. In sum, I therefore propose to articulate the following recommendation in response to the issue of determining the legitimate level of systemic risk appetite by corporate boards: